Judge: PUC has final say on Cal Am water supply project

A state Public Utilities Commission judge has issued a proposed decision that makes it clear the agency has the final say on California American Water's Peninsula water supply project.

Administrative law judge Gary Weatherford's proposal would formalize the commission's position that its authority pre-empts a Monterey County ordinance that requires desal plants to be operated by public entities.

While the proposed decision is not expected to hinder a public participation proposal from the Monterey Peninsula Regional Water Authority for oversight of Cal Am's portion of the $400 million project — the north Marina desalination plant — it could influence the details of any such proposal.

In the proposed decision, issued Friday, Weatherford recommended the commission immediately find that it has a constitutionally guaranteed authority to govern water and sewer service that trumps local rules, and that a superior court also has no jurisdiction over the matter.

The county in June filed suit against Cal Am in San Francisco County Superior Court, seeking a ruling on whether its ordinance applied to Cal Am's proposal. The county argued it had a compelling interest in protecting public health and safety by ensuring that any desal plant operator would have the "technical, managerial and financial capacity" to provide a "continuous supply of safe drinking water."

Weatherford urged the PUC to direct Cal Am to immediately seek dismissal, summary judgment or another favorable ruling in the case.

A PUC attorney and a former county counsel previously said they thought the local ordinance would not be enforceable in its entirety against Cal Am.

County Counsel Charles McKee said the county's primary interest is in seeking to preserve as much of its authority under the ordinance as possible, even if the public ownership element was struck down.

McKee said he was concerned that a state agency, not a court of law, would seek to declare a local ordinance void, adding that there should be "some respect" for local control over critical issues involving health, the coastline and other potential impacts. He said the state Coastal Commission previously requested that the county include the ordinance in its local coastal plan as part of the effort to address possible health concerns and the "potential proliferation" of desal plants along the coast.

But McKee also said the county recognized the PUC's governance role and hoped to resolve any differences over "technical aspects" of the ordinance through negotiations with the PUC and Cal Am.

The county and Cal Am were apparently already in negotiations over the lawsuit.

Cal Am spokeswoman Catherine Bowie said company officials felt the proposed decision was "correct in its interpretation of the law," but stressed that the decision is not final. Bowie did not respond when asked if Cal Am had sought a proposed decision from the PUC on the matter, nor if the proposal could affect negotiations with the county.

Bowie said the proposed decision would not affect Cal Am's position on the Peninsula water authority's still-developing public participation proposal.

"We fully appreciate that public involvement is an important issue and are working cooperatively with the regional water authority," she said.

Weatherford said the proposed decision does not address the "relative benefits of public versus private ownership," nor preclude any public agency from developing a water supply solution for the Peninsula. He said Cal Am has been directed to consider "in good faith" any proposal for "direct participation" by a public agency in the company's proposed water project.

The regional water authority has proposed forming a public governance committee that would have varying degrees of oversight on virtually every aspect of Cal Am's desal project. Weatherford has set an Oct. 1 deadline for all such proposals to be filed with the PUC.

In addition to the authority board, the Monterey Peninsula Water Management District board has approved the proposal.

But the county Board of Supervisors on Tuesday postponed approving the proposed appointment of Supervisor Dave Potter and Water Resources Agency interim general manager David Chardavoyne to the governance committee. The supervisors decided to re-schedule the approval so it could be placed on the board's own agenda, rather than the water agency's, which is also approved by supervisors, in an effort to make it clear the county and not the agency will represent the county's interests on the committee.

However, Carmel Mayor Jason Burnett, a member of the authority board, said supervisors would be voting on the matter Oct. 2, a day after the PUC deadline. Burnett said he would prefer for the county to be included in the proposal when it is filed with the PUC, and expressed concern about the supervisors' failure to act.

Supervisor Jane Parker dissented from postponing the vote a week, arguing that the board shouldn't approve anything that hasn't been finalized and saying the details of the proposal are still being worked out between the authority and Cal Am.